"Russia needs to seize that opportunity," Obama said. "Russia needs to recognize that President-elect Poroshenko is the legitimately elected leader of Ukraine and engage the government in Kiev."

Obama did not rule out talks in Paris with Putin later Thursday. Both leaders are due to attend a dinner there ahead of Friday's 70th anniversary of the Allied Normandy landings.

"I have no doubt I will see Mr. Putin," Obama said. "He and I have business-like relations."

"Should we have the opportunity to talk, I'll take the opportunity to repeat the message I've just given," he said.

G-7 leaders issued a statement saying there was unanimous agreement that Russia should withdraw all is forces from the border with Ukraine and stop the flow of weapons and militants across the border.

Obama added that Putin would be judged on his actions, not words.

"If he continues a strategy of undermining the sovereignty of Ukraine then we have no choice but to respond," he said. "Perhaps he has been surprised by the degree of unity that has been displayed. We have to see what he does, not what he says."

The announcement came as G-7 leaders held their first meeting without Russia in 17 years.

Thursday’s summit was originally supposed to have taken place in Sochi, Russia, but those plans were cancelled when Russia annexed the Crimean Peninsula.It is the first time since 1997 that the summit has taken place without Russia.